BOX INC [BOX] Filings

10-Q 1 box-20221031.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-36805

Box, Inc.

(Exact name of registrant as specified in its charter)

Delaware

20-2714444

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

900 Jefferson Ave.

Redwood City, California 94063

(Address of principal executive offices and Zip Code)

(877) 729-4269

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share	BOX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Small reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 30, 2022, the number of shares of the registrant’s Class A common stock outstanding was 142,914,809.

TABLE OF CONTENTS


	PART I – FINANCIAL INFORMATION	Page
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets as of October 31, 2022 and January 31, 2022	5
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended October 31, 2022 and 2021	6
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended October 31, 2022 and 2021	7
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' (Deficit) Equity for the Three and Nine Months Ended October 31, 2022 and 2021	8
	Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended October 31, 2022 and 2021	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 6.	Exhibits	60
	Signatures	61

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

our future financial and operating results, including expectations regarding revenue, deferred revenue, billings, remaining performance obligations, gross margins, operating income, and net retention rate;

•

our ability to maintain an adequate rate of revenue and billings growth and our expectations regarding such growth;

•

our market opportunity, business plan and ability to effectively manage our growth;

•

our ability to achieve profitability and expand or maintain positive cash flow;

•

our ability to achieve our long-term and short-term gross and operating margin objectives;

•

our ability to grow our remaining performance obligations;

•

our expectations regarding our revenue mix;

•

our ability to maintain, protect and enhance our brand and intellectual property;

•

costs associated with defending intellectual property infringement and other claims and the frequency of such claims;

•

our ability to attract and retain end-customers;

•

our ability to further penetrate our existing customer base;

•

our ability to displace existing products in established markets;

•

our expectations regarding timing of new products, product bundles and features;

•

our ability to expand our leadership position as a cloud content management platform;

•

our ability to timely and effectively scale and adapt our existing technology;

•

our ability to innovate new products and features and bring them to market in a timely manner and the expected benefits to customers and potential customers of our products;

•

our investment strategy, including our plans to further invest in our business, including investment in research and development, sales and marketing, our data center infrastructure and our professional services organization, and our ability to effectively manage such investments;

•

our ability to expand internationally;

•

expectations about competition and its effect in our market and our ability to compete;

•

the effects of seasonal trends on our operating results;

•

use of non-GAAP financial measures;

•

our belief regarding the sufficiency of our cash, cash equivalents and our credit facilities to meet our working capital and capital expenditure needs for at least the next 12 months;

•

our expectations concerning relationships with third parties;

•

our ability to attract and retain qualified employees and key personnel;

•

our ability to realize the anticipated benefits of our partnerships with third parties;

•

the effects of new laws, policies, taxes and regulations on our business;

•

management’s plans, beliefs and objectives, including the importance of our brand and culture on our business;

•

our ability to maintain, protect and enhance our brand and intellectual property;

•

acquisitions of or investments in complementary companies, products, services or technologies and our ability to successfully integrate such companies or assets;

•

the KKR-led investment in Box and achievement of its potential benefits;

•

any potential repurchase of our Class A common stock;

•

the potential impact of shareholder activism on Box’s business and operations;

•

the effects of global economic conditions to our business;

•

the impact of the Russian invasion of Ukraine on our business and operating results; and

•

the impact of public health epidemics or pandemics, such as the COVID-19 pandemic, and governmental responses thereto.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations, except as required by law.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

BOX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)


	October 31,			January 31,
	2022			2022
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	358,060		$	416,274
Short-term investments		44,567			170,000
Accounts receivable, net		176,593			256,312
Deferred commissions		46,120			46,025
Other current assets		31,187			27,953
Total current assets		656,527			916,564
Property and equipment, net		67,755			105,755
Operating lease right-of-use assets, net		142,147			172,808
Goodwill		70,702			74,466
Deferred commissions, non-current		69,251			72,884
Other long-term assets		50,068			49,532
Total assets	$	1,056,450		$	1,392,009
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	$	45,552		$	58,942
Accrued compensation and benefits		32,451			54,705
Finance lease liabilities		31,175			41,235
Operating lease liabilities		46,203			44,608
Deferred revenue		442,015			519,485
Total current liabilities		597,396			718,975
Debt, net, non-current		368,878			367,463
Operating lease liabilities, non-current		131,143			168,192
Other long-term liabilities		37,193			44,586
Total liabilities		1,134,610			1,299,216
Commitments and contingencies (Note 8)
Series A convertible preferred stock, par value of $0.0001 per share; 500 shares (unaudited) authorized, issued and outstanding as of October 31 and January 31, 2022		489,434			487,880
Stockholders’ deficit:
Class A common stock, par value $0.0001 per share; 1,000,000 shares authorized; 142,915 shares (unaudited) and 145,081 shares issued and outstanding as of October 31 and January 31, 2022, respectively		14			15
Additional paid-in capital		802,534			972,020
Accumulated other comprehensive loss		(13,817	)		(4,543	)
Accumulated deficit		(1,356,325	)		(1,362,579	)
Total stockholders’ deficit		(567,594	)		(395,087	)
Total liabilities, convertible preferred stock and stockholders’ deficit	$	1,056,450		$	1,392,009

See notes to condensed consolidated financial statements.

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended						Nine Months Ended
	October 31,						October 31,
	2022			2021			2022			2021
Revenue	$	249,951		$	224,044		$	734,398		$	640,971
Cost of revenue		64,490			63,069			191,542			184,804
Gross profit		185,461			160,975			542,856			456,167
Operating expenses:
Research and development		59,107			55,837			182,805			159,418
Sales and marketing		81,566			76,368			248,075			218,967
General and administrative		31,422			39,857			94,846			105,242
Total operating expenses		172,095			172,062			525,726			483,627
Income (loss) from operations		13,366			(11,087	)		17,130			(27,460	)
Interest and other expense, net		(1,427	)		(2,336	)		(6,235	)		(8,275	)
Income (loss) before provision for income taxes		11,939			(13,423	)		10,895			(35,735	)
Provision for income taxes		2,031			438			4,641			1,399
Net income (loss)	$	9,908		$	(13,861	)	$	6,254		$	(37,134	)
Accretion and dividend on series A convertible preferred stock		(4,278	)		(4,301	)		(12,804	)		(8,086	)
Undistributed earnings attributable to preferred stockholders		(648	)		—			—			—
Net income (loss) attributable to common stockholders	$	4,982		$	(18,162	)	$	(6,550	)	$	(45,220	)
Net income (loss) per share attributable to common stockholders, basic and diluted	$	0.03		$	(0.12	)	$	(0.05	)	$	(0.29	)
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders
Basic		142,385			151,426			143,604			158,068
Diluted		148,127			151,426			143,604			158,068

See notes to condensed consolidated financial statements.

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


	Three Months Ended						Nine Months Ended
	October 31,						October 31,
	2022			2021			2022			2021
Net income (loss)	$	9,908		$	(13,861	)	$	6,254		$	(37,134	)
Other comprehensive loss:
Net foreign currency translation loss		(3,390	)		(1,754	)		(10,986	)		(2,730	)
Other		806			452			1,712			754
Other comprehensive loss		(2,584	)		(1,302	)		(9,274	)		(1,976	)
Comprehensive income (loss)	$	7,324		$	(15,163	)	$	(3,020	)	$	(39,110	)

See notes to condensed consolidated financial statements.

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY

(In thousands)

(Unaudited)


	Three Months Ended October 31, 2022
	Series A Convertible Preferred Stock				Class A Common Stock						Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Shares			Amount			Capital			Loss			Deficit			Deficit
Balance as of July 31, 2022		500	$	488,906		142,320		$	14		$	797,948		$	(11,233	)	$	(1,366,233	)	$	(579,504	)
Issuance of common stock under employee equity plans, net of shares withheld for employee payroll taxes		—		—		1,699			—			(5,132	)		—			—			(5,132	)
Stock-based compensation related to stock awards		—		—		—			—			43,159			—			—			43,159
Accretion and dividend on series A convertible preferred stock, net of dividends paid		—		528		—			—			(4,278	)		—			—			(4,278	)
Repurchases of common stock		—		—		(1,105	)		—			(29,163	)		—			—			(29,163	)
Other comprehensive loss		—		—		—			—			—			(2,584	)		—			(2,584	)
Net income		—		—		—			—			—			—			9,908			9,908
Balance as of October 31, 2022		500	$	489,434		142,914		$	14		$	802,534		$	(13,817	)	$	(1,356,325	)	$	(567,594	)

	Three Months Ended October 31, 2021
	Series A Convertible Preferred Stock				Class A Common Stock						Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Shares			Amount			Capital			Loss			Deficit			Deficit
Balance as of July 31, 2021		500	$	488,894		152,660		$	15		$	1,193,003		$	(1,612	)	$	(1,344,393	)	$	(152,987	)
Issuance of common stock under employee equity plans, net of shares withheld for employee payroll taxes		—		—		2,057			1			(3,148	)		—			—			(3,147	)
Stock-based compensation related to stock awards		—		—		—			—			40,827			—			—			40,827
Accretion and dividend on series A convertible preferred stock, net of issuance costs		—		4,272		—			—			(4,301	)		—			—			(4,301	)
Repurchases of common stock		—		—		(5,707	)		(1	)		(138,378	)		—			—			(138,379	)
Other comprehensive loss		—		—		—			—			—			(1,302	)		—			(1,302	)
Net loss		—		—		—			—			—			—			(13,861	)		(13,861	)
Balance as of October 31, 2021		500	$	493,166		149,010		$	15		$	1,088,003		$	(2,914	)	$	(1,358,254	)	$	(273,150	)

See notes to condensed consolidated financial statements.

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY

(In thousands)

(Unaudited)


	Nine Months Ended October 31, 2022
	Series A Convertible Preferred Stock				Class A Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Shares		Amount		Capital			Loss			Deficit			Deficit
Balance as of January 31, 2022		500	$	487,880		145,081	$	15	$	972,020		$	(4,543	)	$	(1,362,579	)	$	(395,087	)
Issuance of common stock under employee equity plans, net of shares withheld for employee payroll taxes		—		—		7,166		—		(49,122	)		—			—			(49,122	)
Stock consideration in connection with fiscal 2022 acquisition		—		—		559		—

BOX INC [BOX] Filings
10-Q	[2022-12-02]
10-Q	[2022-08-31]
10-Q	[2022-06-02]
10-K	[2022-03-16]
10-Q	[2021-12-03]
10-Q	[2021-09-03]
10-Q	[2021-06-04]
10-K	[2021-03-19]
10-Q	[2020-12-07]
10-Q	[2020-09-04]
10-Q	[2020-06-04]
10-K	[2020-03-19]
10-Q	[2019-12-06]
10-Q	[2019-09-06]
10-Q	[2019-06-06]
10-K	[2019-03-20]
10-Q	[2018-12-06]
10-Q	[2018-09-07]
10-Q	[2018-06-08]
10-K	[2018-03-22]
10-Q	[2017-12-08]
10-Q	[2017-09-08]
10-Q	[2017-06-09]
10-K	[2017-03-24]
10-Q	[2016-12-08]
10-Q	[2016-09-07]
10-Q	[2016-06-09]
10-K	[2016-03-30]
10-Q	[2015-12-14]
10-Q	[2015-09-11]
10-Q	[2015-06-12]
10-K	[2015-03-30]
S-1	[2014-03-24]